Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Tesla looks to pave the way for Chinese battery makers to come to U.S

Stock MarketsOct 22, 2021 06:31AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: A Tesla logo is seen at the Tesla Shanghai Gigafactory in Shanghai, China January 7, 2019. REUTERS/Aly Song 2/2

By Hyunjoo Jin and Subrat Patnaik

(Reuters) - Tesla (NASDAQ:TSLA) Inc wants to shift to a less expensive battery for its electric vehicles but first needs to figure out how to overcome political tensions to get a Chinese partner to build the iron-based batteries near its U.S. factories.

The world's two biggest economies have yet to resolve disputes over tariffs, intellectual property rights and Chinese incursions into Taiwan's air defense identification zone. And China's sweeping regulatory crackdown, aimed largely at the technology sector, could pose yet another hurdle.

China adopted the technology early and makes 95% of the world's Lithium Iron Phosphate (LFP) batteries, but key patents expire soon and Tesla said it plans to adopt LFP batteries in its fleet of standard-range vehicles globally and move battery production closer to its factories.

"Our goal is to localize all key parts of the vehicles on the continent," Drew Baglino, senior vice president of powertrain and energy engineering at Tesla, said on an earnings call on Wednesday. Tesla is building factories in the United States and Germany.

"We're working internally with our suppliers to accomplish that goal, and not just at the end-assembly level but as far upstream as possible."

Tesla currently uses LFP batteries from China's CATL in some China-made Model 3 and Model Ys, and in the United States it started sales of entry-level Model 3 sedans with LFP.

The company did not respond to a request for comment.

LFP technology is considered to be cheaper and safer than nickel-based batteries, although they lack the same energy density as nickel-based ones to allow cars to travel farther on a single charge.

The technology has garnered interest from EV makers and Reuters reported in June that Apple Inc (NASDAQ:AAPL) is in early stage talks with China's CATL and BYD to get LFP batteries for its planned electric vehicles and wants them to build factories in the United States.

But CATL was reluctant to build a factory in the country due to political tensions between Washington and Beijing as well as cost concerns, people said at that time.

"We are evaluating the opportunity and possibility of manufacture localization in North America," CATL said in a statement on Friday.

"You cannot discount the whole geopolitical aspect of it," Sanjiv Malhotra, founder of battery startup Sparkz and former U.S. Department of Energy executive, told Reuters.

"Our customers, they do not want to be caught in this political crossfire," said the U.S. startup, which is looking at setting up LFP production lines in the United States to challenge China's dominance.

CATL is probably better off manufacturing in China, where they have access to the world's lowest-cost materials, Roth Capital analyst Craig Irwin said.

"A U.S. facility would need a better U.S. supply chain to get similar to the low cost available in China."

'PRIDE AND JOY OF CHINA'

President Joe Biden has made it a priority to support the rollout of electric vehicles to combat climate change, but battery constraints could remain a key hurdle to his ambitious plan.

China is the largest global EV market and dominates the supply chain for the manufacture of lithium-ion batteries, including the processing of minerals and raw materials.

"I call LFP the battery of China, because you really only have CATL and BYD. So these are really the kind of pride and joy of China," said Taylor Ogan, chief executive of Snow Bull Capital.

Electric Last Mile Solutions Inc (ELMS), a commercial electric vehicle company which currently imports CATL'S battery packs, is in talks with the company about the possibility of sourcing batteries at CATL's potential U.S. factory.

Last year, CEO Elon Musk said Tesla would use LFP batteries for its China-made Model 3, saying the move would free up battery capacity for the Semi truck and other vehicles that require higher-density, long-range batteries based in nickel.

Since then, Musk has pledged to use the tech in more vehicles and energy storage systems. A Houston energy project will use LFP batteries.

The company is facing higher costs primarily due to cobalt prices rising around 70% so far this year, with nickel up around 20% and aluminum up around 50%. Tesla uses these materials to make its batteries.

Tesla looks to pave the way for Chinese battery makers to come to U.S
 

Related Articles

Germany stocks lower at close of trade; DAX down 1.35%
Germany stocks lower at close of trade; DAX down 1.35% By Investing.com - Dec 02, 2021

Investing.com – Germany stocks were lower after the close on Thursday, as losses in the Retail, Technology and Media sectors led shares lower. At the close in Frankfurt, the DAX...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (4)
bret lafrance
bret lafrance Oct 22, 2021 7:46AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Interesting how we can so easily be fooled into thinking that Tesla and Musk are any thing more than the current version of "the greatest show on earth". With all of the hype eminating from "the street" it is hard to believe that it will soon come to an end, to be replaced by the next big thing and another too good to be true story of never ending growth and profit.
Bubba Born
Bubba Born Oct 22, 2021 6:56AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Stupid, stupid, stupid idea! Give the Chinese another way to strangle the USA? Thanks, but NO THANKS!
Jack Zhang
Jack_A Oct 22, 2021 6:56AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
then do it yourself, at a low cost!
Joe Wiggs
Joe Wiggs Oct 22, 2021 6:28AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Texas?
Alan Rice
Alan Rice Oct 21, 2021 1:43PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Flint ??
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email